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olice, customs, national food The elements of fraud in the food forged. Most frauds are perpetrated by
regulators, and companies business those who are very familiar with the
have collaborated across For the food safety expert, the main risks are systems and customs of a business, and by
borders for more than a decade selling products that are incorrectly those who have the authority to override
Pto remove counterfeit and labelled or carry a health hazard. At best, the computer.
potentially dangerous food and drink from this is a situation that requires an insured Food fraud risks that go beyond public
circulation. From 2020 to 2021, Interpol’s product recall, or, at worst, the end of the health and reputation include market
annual Operation Opson seized more than company through reputational damage costs associated with loss of sales because,
15,000 tonnes of food and beverages and injury caused. The industry carries for example, competitors or organised
valued at an estimated $60 million. The high levels of certification and inspections crime undercut prices or rivals fill orders
checks in 72 countries led to the opening by customers and suppliers, regulators, more quickly when there is a shortage of
of about 1,000 criminal cases. and third-party assurance firms to prevent ingredients or products.
Most food and drink businesses see incorrect food labelling and potentially Also, there is the risk associated with
risks related to food quality and set risk dangerous foods. One catering butcher I fraudulent product infiltrating the supply
assessment alongside food safety risk visited reported having 65 routine chain. To access the supply chain of a
assessment, which tends to get allocated to inspections in one year and had a team retailer or caterer, the fraudster must:
food quality teams. But food fraud could dedicated to providing the paperwork y Make the product in such a way that it
also involve foods sold in the supermarket needed. passes all diagnostic and visual tests.
with labels that are misleading and From a management control perspective, y Deceive, collude with, bribe, or
manufacturers using inauthentic these certifications, however much blackmail someone inside the
ingredients. (See the sidebar, “What Is Food assurance they provide, are only the business.
Fraud?”) The business and financial risks starting point. The biggest problems I have y Understand the vulnerable points in
of food fraud and their potential costs are seen over several research projects relate to the supply chain and exploit them.
often poorly understood. the reliance on quality systems at the y Know what paperwork needs to be
The horsemeat scandal, which broke in expense of understanding fraud risk more tampered with.
January 2013, is a case in point. Irish food generally. That might include the Furthermore, there are risks of
safety tests had identified horsemeat that assumption that having a certificate is employee, procurement, and sales fraud
was sold as beef in the UK and Ireland. sufficient mitigation, or that the company that all companies may face.
Beef products sold by supermarket chain is protected because employees are
Tesco and beef lasagne sold under the long-standing and trusted, or that the What risk assessment tools are
Findus brand were particularly affected. computer system provides security. As on hand?
The scandal contributed to a sharp drop in forensic accountants and anti-fraud For decades food companies in many
the share price of Tesco, a supermarket experts have found, certificates may be countries have had to prepare and
chain that generated annual turnover of
£61.3 billion (about $75 billion) in the
fiscal year 2022, and severely damaged What is food fraud?
the reputation of frozen food brand
Findus UK. There are several definitions of food fraud and, more broadly, food crime.
This and other food safety scandals in Essentially, the terms address:
the US, China, and elsewhere have y Misleading labelling, such as claiming something is organic when it is
brought about fraud risk assessment and not, making false health claims, or listing false ingredients.
management in the food industry on a y Substitution, where cheaper or illegal ingredients are used to replace
grand scale. Consultants, certification more expensive and/or scarcer ones.
bodies, and assurance firms brought in y Adulteration, where chemicals, dyes, or other nonfood or nondrink
new risk assessment tools and mandated elements are used to enhance or disguise appearance and taste.
them through industry certifications to y Counterfeit, which may contain inedible ingredients, or may be simply a
address food quality and safety concerns. “rip-off” brand.
Still, the industry’s ability to identify y Waste diversion, where foods unfit for human consumption are
financial and business risks related to reintroduced into the supply chain.
food fraud was limited and it became clear In some cases, food fraud poses health risks to consumers. Substituting
that not only was the industry poorly ingredients that contain allergens, pathogens, or poisons can cause death or IMAGES BY CSA IMAGES/GETTY IMAGES
equipped to deal with food fraud, but also serious illness. However, these are uncommon — most health risk is through
very few policies and controls were in long-term consumption of substandard food. Consumer outrage more generally
place to counter the business and is around being “ripped off” and a failure by larger businesses and governments
financial risks of fraud in the food to protect them.
industry.

August 2022 I FM MAGAZINE I 13